Supermarket Own-Label Brands: Acceptable and Better than Ever

The recent rebrand of Morrisons’ own-label packaging caused a stir last week, with many people commenting on the effectiveness of not just the new ‘all white’ packaging design itself, but also the acceptability in today’s society of buying own label. Whatever the answer or opinion on the above, it’s safe to say that supermarkets in general have invested heavily in own label, and the Morrisons packaging refresh is just one of a number of indicators that consumers are fully prepared to increase their purchases of supermarket ‘own label.’

The rise in the cost of household groceries, is driving shoppers to supermarkets’ own-label products and away from pricier branded goods. According to recent research by Nielson*, 48% of 2,000 consumers questioned said they would switch to cheaper own-label alternatives if their weekly food shopping bills rose by 3%.More shoppers than ever are choosing own-brand products from supermarket shelves over named brands, with own-labels accounting for 54% of UK supermarket sales. This is potentially going to be a big problem for brand owners, as over 60% of shoppers think that own-label brands are as good as named brands and better in price! This is nearly double the proportion of consumers who thought that four years ago.

Shoppers are buying more own-label products as they are attracted by both the value for money and the improving product quality. 71% of UK consumers think that the quality of own brand products have improved and 50% of people say they would buy more if supermarkets offered a larger variety.

It’s no accident that shoppers are buying more own label

As with manufacturer brands, retailers have, over time, successfully built equity into their own-brand products by investing in product innovation, further developing ranges and increasing marketing activity.

The supermarkets’ desire to remain competitive has meant that they have been absorbing rising costs instead of passing them onto consumers.

Interestingly, on average39% of consumers believe that well-known brands are usually better than shops’ versions, however 65% think there isn’t much difference between branded goods and supermarkets’ own products. For both statements, Asda, Morrisons, and Tesco customers score close to the average.

Of course it’s highly likely that shoppers preference for own-label vs ‘brand’ is product specific. For example, mainstream brands such as Coca-Cola will still be chosen by majority of shoppers due to their brand loyalty and the reliability the brand gives to its consumers.

Own-brand is growing

Own-brand sales are growing across all major food retailers but fastest at the discounters Aldi, Lidl and at the Co-operative, Iceland, M&S and Tesco. Data showed that Lidl was the fastest growing retailer for the period, thanks to a sales increase of 19.2 per cent. Growth was particularly notable among fresh and chilled products, such as dairy, as well as in white and rosé wines, where Lidl is growing ahead of the market, Kantar said. Aldi’s managed to grow sales by 15.6 per cent.

The market share of supermarket own brands has risen 5% over the 12 week period.64% of shoppers purchased a product from Tesco’s own label Farm Brands range, while the Co-op’s Irresistible range was the supermarket’s fastest-growing line within the business. Own brand is also core to the product offering at the Co-op, significantly contributing to the supermarket overall business performance.

To drive loyalty, the supermarket chain makes own brand a central part of its membership strategy, offering members 5%back for themselves and 1% for a local community cause when they buy a Co-op own brand product.

Even drug stores are starting to position their own-labeled brands as Superdrug has a unique positioning for its own brand products as well. Keen to show there is more to it than simply value, the retailer has positioned itself as an affordable option for cruelty free beauty products. All its cosmetics carry the leaping rabbit symbol to indicate they are certified by Cruelty Free International and in June Superdrug will relaunch its B.Makeup range as a fully vegan cosmetics collection.

Whatever the case, consumers across the UK are opting for own brand products in increasing numbers for two main reasons. Firstly consumers are still ‘feeling the pinch’. Wages have had little or no increase in years, the post-recession fallout is still being felt, and with Brexit looming the future economy is uncertain. All this has left consumers looking for the cheaper supermarket deals. Savvy shoppers have realised that they shouldn’t pay more for something when the own label version is just as good. And there’s the second reason – own-label is far better in quality than ever before because supermarkets have invested in product quality as well as packaging and marketing around it. The rise of retailers such as Aldi and Lidl, has, in part, driven this investment by providing own-label and cheaper foreign brands of good quality.